CHINACHEM CHARITABLE FOUNDATION LTD v. WILKINSON & GRIST (a firm)

HCMP 877/2020, HCMP 878/2020,

HCMP 879/2020, HCMP 880/2020,

HCMP 881/2020, HCMP 882/2020

(Consolidated)

[2023] HKCFI 3208

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 877 OF 2020

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 878 OF 2020

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 879 OF 2020

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 880 OF 2020

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 881 OF 2020

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 882 OF 2020

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BETWEEN

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(Consolidated pursuant to Order of Master Chow dated 14 September 2020)

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DECISION

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1.  This is the Plaintiff’s (“Foundation”) appeal against the Order of Master M Hui dated 10 February 2023 by which the Foundation’s discovery application pursuant to paras 1(b) and 1(c) of an Amended Summons re-filed on 27 October 2022 (“Amended Summons”) was dismissed with costs.

2.  Pursuant to a Decision of this Court dated 3 December 2021 taxation was ordered in respect of 54 fee notes (“Fee Notes”) issued by the Defendant (“WG”) to the Foundation for legal services it had provided. The legal services involved a number of matters and were rendered over a long period of time. Some of the work was carried out over a decade ago. The total amount of the Fee Notes (including disbursements) came to about HK$67.1 million.

3.  For the purpose of the taxation proceedings (“Taxation”), WG had provided the Foundation with all the Fee Notes in taxable form. The discovery being sought are :

(1) List of documents/information (with the requisite particulars identifying the exact documents/information) in support of the time entries in relation to the Fee Notes;

(2) Contemporaneous computer printout (marked with and/or endorsed by the partner-in-charge of WG) showing the raw time entries against which the relevant Fee Notes were issued.

4.  In Li Sin Man Seline v Li Shu Chung [2018] 3 HKLRD 294, [28], per Lisa Wong J, the taxation process was described as follows. The taxing master would have before him the receiving party’s bill of costs and the paying party’s list of objections as well as their respective materials in support or opposition. The master would then (i) review the items of costs claimed; (ii) consider the objections raised by the paying party in respect of each item of costs; and then (iii) decide, for each item of costs, the amount which should be allowed. It was thus an item-by-item process whereby the court reaches a decision on what amount of costs to allow on each item of the costs claimed by the receiving party.

5.  I would add that in respect of items to which there is no objection by the paying party, the master may deal with them swiftly.

6.  Under O 62, rr 13A and 14, taxing masters have extensive management power, including the power to direct the production of any document which may be relevant in connection with taxation proceedings (r 14(d)).

7.  In Chinachem Charitable Foundation Ltd v Chan Chun Cheun & Anor (No. 3) [2011] 4 HKC 582, [8], per Master Levy, the Court noted that discovery should be limited to documents that are relevant in connection with the proceedings for the taxation of costs and not in relation to any other question. Where the paying party raises a real and relevant dispute that is not fanciful or fishing, then the rule is engaged and the taxing master must exercise his judicial discretion to decide whether to order production of documents.

8.  Mr Man SC, who appeared with Ms So for the Foundation, submitted that the discovery in question is needed to enable the Foundation to consider and formulate its objections to the Fee Notes.

9.  Mr Tai, who appeared for WG, submitted that the discovery application was rejected by the learned Master due to the Foundation’s refusal to identify those items in the Fee Notes in respect of which further particulars were needed as suggested by the Master prior to the substantive hearing of the Amended Summons. It was primarily a case management decision of the Master. It is common ground that this Court may give the Master’s decision the weight it deserves[1].

10.  Mr Tai’s submission as to what transpired before the Master, apart from the fact that he appeared below, is supported by the transcripts, eg, C1/15/371G-O.

11.  I begin by examining the Fee Notes. Six of them can be found in the hearing bundles. Each one of them is a lengthy (some very lengthy) document containing descriptions of the work carried out and the time spent. The length of the documents speaks to the number of entries in the Fee Notes.

12.  In the absence of evidence to the contrary, the Court should proceed on the basis that the Foundation was alive to the work which WG had carried out under its instructions. Further, there is no warrant to be unduly sceptical on the integrity of professionals in the absence of evidence giving rise to scepticism. There is no such evidence before the Court.

13.  In the premises, acting reasonably and constructively, there is no reason for the Foundation to disagree with the Master’s suggestion that it should first identify the entries in the Fee Notes in respect of which particulars are needed. Otherwise, the discovery exercise would be extremely onerous and disproportionate. It is highly doubtful whether it is even in the interest of the Foundation to be provided with a very substantial amount of material and to go through it for the purpose of Taxation.

14.  This Court was informed by Mr Tai that 14 of the Fee Notes concerned exclusively disbursements. It is perplexing why the Foundation is unable to indicate whether it has any objection to the disbursements.

15.  This is of course a rehearing, but this Court agrees with the view taken by the Master that the Foundation should first identify those items for which it required particulars.

16.  In his supplemental submissions, Mr Man had identified 5 specific entries in two of the Fee Notes (in the hearing bundles) where the work descriptions were in general terms, eg, “attending various emails”. Mr Man suggested that discovery should at least be ordered in respect of those entries.

17.  Whilst there is force in Mr Man’s submission, I take the view that the better course is for the identification exercise by the Foundation to be carried out in one go rather than a piecemeal fashion which is likely to be inflationary in terms of time and costs.

18.  Finally, Mr Man submitted that para 1(c) of the Amended Summons (see para 3(2) above) should be considered separately because there is no suggestion that the raw data sought does not exist, and it would not be oppressive for WG to produce them in answer to its duty to be transparent with its charges. Such material would inform the Foundation on whether discount had or had not been given in the Fee Notes on the actual time spent. Such knowledge would in turn assist the Foundation on its decision whether to raise objection.

19.  With respect, I am not persuaded that the raw time entries are relevant or necessary, unless there is evidence to doubt the integrity of WG. Those entries did not necessarily reflect the time for which the Foundation was charged. The partner-in-charge would have made the final decision on these matters, and the Foundation was charged accordingly^[2]. The Fee Notes themselves (with further particulars where appropriate) would inform the Foundation about the nature of work done and the time spent. The fact that discount to the time spent was or was not given would not render excessive charges reasonable, or render reasonable charges excessive.

20.  It should be added that the absence of justification on the relevant of the raw data tends to suggest that this is a fishing exercise. Further, it does not follow from the fact that the data is available that there is no oppression in having them produced. The Court has to take into account the volume of work done by WG, from which it must follow that the discovery would involve a substantial amount of material going back many years.

21.  For these reasons, this appeal is dismissed without prejudice to the Foundation’s right to make a discovery application in terms similar to para 1(b) of the Amended Summons after the compliance with the following directions:

The Foundation do identify those entries in the Fee Notes in respect of which further particulars are required within 42 days from today.

22.  I expect that WG will act reasonably in response, which may obviate the need for any discovery application. Apart from the interest of expeditious and costs effective disposal of the Taxation, unreasonableness may be visited with an adverse costs order.

23.  WG is to have its costs of this appeal, which had been agreed by the parties at HK$140,000.

24.  I am grateful to counsel for their assistance.